Sales and Use Tax Rulings | Local Taxes

Company does not have a business presence in the state-administered cities and counties. However, Company does have an obligation to collect the state retailer’s use tax and state-administered special districts use tax.

Company is doing business in Colorado and is required to collect sales tax on sales made into Colorado. Company must collect local sales taxes in jurisdictions in which Company shares with the purchasers. If Company ships product into a local jurisdiction in which it does not have a direct or indirect location, then Company should report the sale on its Retailer’s Use Tax Account and collect state use tax and, if the customer is within a special district that levies a use tax, any applicable special district use tax.

The continuous presence of a lessor's business assets in a local tax jurisdiction is typically sufficient to create nexus in that local tax jurisdiction and, thus, the lessor must collect local sales taxes.

In general, a seller has sales tax nexus in Colorado if it has employees or independent contractors in this state, even if their activities are completely unrelated to the sales transactions. A contract carrier, unlike a common carrier, can also create substantial nexus with Colorado (and the local jurisdictions into which it delivers goods) if Company regularly ships goods via a contract carrier into Colorado. A company has substantial nexus for purposes of income tax if it has property, payroll, or sales in Colorado that exceed a certain dollar thresholds. Employees in Colorado for less than a day do not give rise to a wage withholding obligation. However, if the employee performs services for more than a single day in Colorado, they are required to file and pay Colorado income tax, and the employer is required to withhold and remit Colorado income tax.

Company’s purchases of steel, cement, pipe, and other material from suppliers are not wholesale purchases because Company alters and uses the materials to build structures. If the sale of equipment occurs outside Colorado and Company pays sales or use tax to another state and Company, thereafter, moves the machinery to Colorado for use in Colorado, then Company must pay Colorado state use tax and any state-administered local use tax applicable to the location where the machinery is registered. Company is entitled to a credit against any such Colorado state and local use taxes equal to the amount of sales or use tax paid to the other state.

Company has nexus in Colorado because it is a component member of a combined group of corporations and another component member has a business presence in Colorado. In addition, Affiliated Company is an indirect representative of Company when it acts on behalf of Company to solicit and facilitate sales and sales-related activities because, among other reasons, it accepts returns on behalf of Company and participates in a loyalty points program with Affiliated Company. Therefore, Company must open a sales tax account and retailer’s use tax account to report and collect local and special district sales taxes for sales shipped into local jurisdictions in which Affiliated Company's stores are located.

Meal replacements that have a Nutrition Facts label qualify as 'food' and, therefore, are exempt from state sales and use taxes if sold for domestic home consumption. Products are subject to local sales taxes of local jurisdictions that elect to levy sales and use taxes on food, unless product is purchased with SNAP or WIC benefits. The tax treatment of a bundled transaction depends on the items in the bundle, the value of the items, and whether the items are separable.

A subscription fee for an online publication, which is a duplicate of Company's newspaper, is not subject to state and state-administered local sales and use taxes because it is still considered a newspaper. A subscription fee for access to stock screens, comparative performance ratings, and emerging stocks is a service and, thus, not subject to state sales or use tax.

The place where the vehicle is registered will determine which state and local taxes apply. If the person leasing the vehicle is, at the time the lease is executed, a non-resident of Colorado and immediately takes the vehicle to another state for use outside of Colorado, then Company/dealer is not liable to collect any taxes on the leased vehicle.

When Company and lessee / purchaser are located in the same tax jurisdiction, then Company must collect sales tax for that state-administered local tax jurisdiction, but does not have an obligation to collect the local sales taxes of other local tax jurisdictions in which Company does not have a sufficient nexus.

The collection of local sales and use taxes depends on the local tax jurisdiction in which both the retailer and customer are located. The means by which a product is delivered can affect whether local sales and use tax applies.

Products in question qualify as 'food' and, therefore, are exempt from state sales and use taxes if sold for domestic home consumption. These products are subject to local sales taxes of those local jurisdictions that have elected to levy sales and use taxes on food, unless the product is purchased with SNAP or WIC benefits.